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Qbe technical claims brief november 2010

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"Lord Young was commissioned by David Cameron before the last general election to report on the perceived “compensation culture” and Health and Safety Law. He delivered his report on the 15 October......

"Lord Young was commissioned by David Cameron before the last general election to report on the perceived “compensation culture” and Health and Safety Law. He delivered his report on the 15 October this year.
The report’s stated aim is to free businesses from unnecessary bureaucracy and fear of litigation."

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  • 1. Technical claims brief Monthly update – November 2010
  • 2. Contents Technical claims brief Monthly update November 2010 News 1 “Common Sense” or “Back to Basics”?: Lord Young delivers his report 1 Court of Appeal delivers judgment in Employer’s Liability policy “Trigger” test cases 2 Insurance lawyers highlight fraud 3 Costs 3 No automatic right to costs pre-litigation: The National Trust v J.G.Holt t/a City Plant - Trowbridge County Court (2010) 3 Liability 4 Claimant suffers permanent disability due to general practitioner’s negligence: Quelcutti v Luckraj – Out of court settlement (2010) 4 Taking responsibility for icy pavements: Susan Durrant v Thames Water Utilities Ltd and Surrey County Council - Guildford County Court (2010) 5 Quantum 6 “Record £17.5 million” periodical payment award: Chrissie Johnson (A protected person....) v Serena Compton-Cooke - High Court 2010 6 Step-parents once more able to claim fatal accident compensation in Scotland: Roslyn Evelyn Mykoliw and Others v Arthur James Botterill – Court of Session Outer House (2010) 7 Scottish loss of society awards “Out of control”: Philipa Young and Marie Paiser v M.O.D. - Court of Session (2010) 8 Disclaimer 9 Technical claims brief, monthly update – November 2010
  • 3. News “Common Sense” or “Back to Basics”?: Lord Young delivers his report Lord Young was commissioned by David Cameron before the last general election to report on the perceived “compensation culture” and Health and Safety Law. He delivered his report on the 15 October this year. The report’s stated aim is to free businesses from unnecessary bureaucracy and fear of litigation. Amongst other things the report recommends that: • Lord Jackson’s recommendations should be implemented (see February 2010 Brief) • Abandonment of Conditional Fee Success Fees and After The Event Insurance recovery • Extension of the current personal Comment: The report holds out the injury claims process for low value prospect of financial savings for both motor claims to all personal injury businesses and their insurers on legal costs claims valued at under £10,000 and and administration but to what extent these to increase the motor claims limit to proposals will be successfully implemented £25,000 remains to be seen. Implementation is • Restrict referral agencies and personal unlikely to be straightforward and some injury lawyers advertising reforms will face considerable opposition. • Prevent insurers requiring low hazard Lord Young’s full report “Common Sense businesses to employ health and safety Common Safety” can be viewed on the consultants (QBE does not do this and Government website: www.number10.gov.uk provides free risk management advice) • Insurers should not prevent “worthwhile activities” by refusing to quote to cover “The aim is to free businesses from them unnecessary bureaucratic burdens and • Simplify risk assessment procedures the fear of having to pay out unjustified for school trips and activities, voluntary damages claims and legal fees. Above organisations and low risk work places all it means applying common sense not • Extend RIDDOR (Report of Injuries, just to compensation but to everyday Diseases and Dangerous Occurrences decisions once again.” Regulations 1995) reporting threshold Lord Young of Graffham from 3 to 7 days absence • Current Health and Safety regulations should be consolidated into a single set.
  • 4. Court of Appeal delivers judgment in Employer’s Liability policy “Trigger” test cases The Court of Appeal has delivered its judgment in Durham v BAI (Run Off) Ltd and others. These important test cases deal with the issue of when Employers Liability (EL) policy cover is triggered in mesothelioma cases. Proceedings were originally issued against four insurers in run-off who had suspended payment of mesothelioma claims following the Court of Appeal’s ruling in Bolton v MMI and Commercial Union. The Court of Appeal in Bolton had concluded that Public Liability policies written on an “occurrence” basis engaged when mesothelioma manifested itself as opposed to the date of negligent exposure some years before. The insurers’ policy wordings referred to disease and bodily injury “contracted” or “sustained” during the period of cover. They argued that these had the same meaning as At first instance the court concluded that The judgment was on a majority basis “occurred” and that the decision in Bolton the insurers EL policies should respond with the Court of Appeal failing to reach applied equally well to EL policies which to mesothelioma claims on a traditional consensus on most of the main issues. No meant that their policies did not respond “causation” basis. In other words their clear guidance has emerged and permission until much later. policies engaged at the date of negligent has been granted to the losing parties exposure. The insurers appealed. to appeal to the Supreme Court. In the meantime some victims of mesothelioma The Court of Appeal has now reached and their families may go uncompensated. the following conclusions: Comment – The Court of Appeal has not • Where the wording used is “sustained”, brought the clarity to this issue that many the policy in force when the disease commentators hoped for and a further starts to develop (manifests) responds; appeal now seems inevitable. If the Supreme Court does not alter the Court of Appeal’s • Where the wording used is findings, insurers who held risks more “contracted”, the policy in force at the recently are likely to be faced with additional time of negligent exposure responds; liabilities that their underwriters could not • Policies incepted after the Employers have allowed for in setting premiums. A Liability Compulsory Insurance Act smaller number of insurers are likely to be 1969 came into force (January 1972) faced with a larger proportion of the claims. respond if disease is caused during the life of the policy regardless of the wording; 2 Technical claims brief, monthly update – November 2010
  • 5. Insurance lawyers Costs When QBE refused to pay the claimant’s costs their solicitors attempted to refund the highlight fraud No automatic right to costs settlement and issued Part 7 proceedings. In a response to the Law Commission’s Pre-litigation: The National The defendants relied upon the defence consultation on the Eleventh Programme of “tender before action” and also argued of Law Reform the Forum of Insurance Trust v J.G.Holt t/a City that the form of discharge compromised Lawyers (FOIL) has raised the very serious Plant - Trowbridge County all the issues between the parties. The issue of the courts’ approach to fraudulent Court (2010) claimant’s solicitors argued that there was claims. In a letter to the Chairman of the an agreement in principle to pay their costs Commission Dan Cutts, the president The defendants who were insured by QBE as they had made it plain in correspondence of FOIL, cites the £1.9 billion a year that caused substantial damage to a gate and that their offer to settle the claim had been general insurance fraud is estimated to adjoining masonry when their vehicle collided conditional on their costs being paid. cost the UK insurance industry and the with a building owned by the National £350 million a year estimated to come Trust. The claimant instructed solicitors The judge found for the defendants. from organised motor fraud alone. who wrote to QBE on their client’s behalf There was no agreement to pay costs; the to recover the cost of the repairs. Liability defendants had “carefully and assiduously FOIL has suggested that the Civil Procedure was promptly conceded and quantum was avoided any mention of costs”. In addition Rules be amended to give judges a far later agreed by loss adjusters instructed by the “Form of Discharge” compromised all greater range of sanctions with the power QBE. The claimant’s solicitors had asked in matters between the parties. The claim was to strike out at any time and to extend the correspondence for their costs to be paid dismissed and costs of the action awarded grounds for strike out to include not just but this was never agreed. to the defendants. fraudulent claims but any claims tainted by fraud or by conduct in support of other Once quantum was agreed the loss Comment: many claimant solicitors in fraudulent claims. adjusters wrote to the claimant’s solicitors England and Wales seem to genuinely with a discharge form which stated that the believe that there is an automatic entitlement Comment: many insurers have expressed repair cost was “accepted in full and final to costs in almost any situation but this their frustration at the perceived lack of settlement and discharge of all claims”. is not the case and the “tender before firmness by the judiciary in tackling the There was no offer or even mention of action” defence should be borne in mind serious and growing problem of insurance costs. The claimant’s solicitors signed by defendants who settle claims prior to fraud. FOIL’s comments to the Law and returned the discharge form and a proceedings being issued. Commission are likely to be welcomed by settlement cheque was then issued and most if not all insurers who will hope that banked by the claimant’s solicitors. the Commission takes some positive action in response.
  • 6. Liability Claimant suffers permanent disability due to general practitioner’s negligence: Quelcutti v Luckraj – Out of court settlement (2010) The claimant suffered a disc prolapse and attended his general practitioner complaining of pain and numbness in his lower back. The doctor failed to examine the claimant but did refer him for an urgent MRI scan which was due to take place a few days later. In the meantime the undiagnosed disc prolapse had filled the claimant’s spinal canal and was causing compression nerve damage, a condition known as “cauda equina” syndrome. Faced with worsening pain the claimant re-attended his doctor the next day and was prescribed painkillers and anti-inflammatory medication. The claimant attended his doctor for the third time the following day and was finally sent to a hospital where his condition was correctly diagnosed. He was then referred for an urgent decompression operation. Despite the surgery the claimant was left with sexual dysfunction, loss of bowel and bladder control and severe restriction and discomfort in his back so that he could not stand or sit for long at a time. He sued his GP saying that she was negligent in failing to examine him, failing to admit him to hospital immediately, failing to advise him to come back to her or go to an accident and emergency department if symptoms became worse and causing or contributing to a delay in the correct diagnosis and treatment. Comment: road traffic and work place claims than would otherwise have arisen accidents can lead to disc prolapse and from the initial effect of an accident. This The GP admitted liability and an out of subsequent nerve compression. If this is case serves as a reminder that it is possible court settlement of £800,000 was agreed. not quickly diagnosed and treated neural to successfully pursue medical practitioners damage and disability may result. This who worsen a claimant’s condition by failing in turn can lead to Motor and Employers to make a timely diagnosis. Liability insurers facing much more serious 4 Technical claims brief, monthly update – November 2010
  • 7. Taking responsibility for icy pavements: Susan Durrant v Thames Water Utilities Ltd and Surrey County Council - Guildford County Court (2010) The claimant suffered a fracture to her elbow when she slipped on an icy pavement. The ice had formed when water leaking from a stopcock had frozen in cold weather. The claimant brought proceedings against Thames Water who had been aware of the leak and who had on one occasion sent out a technician who had temporarily placed a traffic cone by it as a warning and gritted around it. The claimant argued that Thames Water had a strict liability under the Water Industry Act 1991 or in the alternative that they were liable at common law having adopted responsibility for the hazard but then abandoned it. The claimant also sued the Local Authority arguing breach of duty under the Highways Act 1980 s.41 (1A). The judge did comment that this scenario The Judge found that the Local Authority was different to that of a householder who had in place systems for obtaining by gritting outside of his house on one information on the dangers of ice and occasion did not adopt responsibility for procedures for dealing with any problems. continuing to do so. Having not had notice of the continuing problem with the freezing water from the leaking stopcock it was not reasonably Comment: with a severe winter forecast practical for them to have dealt with it and the Government urging the public to be and so the statutory defence under the good citizens by clearing ice and snow from Highways Act 1980 s58 applied. in front of their homes this could be a topical case. The judgment raises the question as to whether a homeowner who grits or clears Thames Water also escaped statutory ice not once but on a regular basis and then liability as the leaking stopcock was situated stops would be held liable at common law in on private property. They were however the event of a claimant injuring themselves held liable at common law. They had taken slipping on ice. responsibility for a hazard identified by their technician and had taken remedial action but then abandoned that responsibility by removing the warning traffic cone, not renewing the grit and failing to tell the property owner of the leak in breach of their own internal policy.
  • 8. Quantum The claimant’s solicitors have been quick Comment: this tragic case demonstrates to publicise the size of this settlement and that estimating the life expectancy of “Record £17.5 million” several national newspapers have reported an injured claimant is one of the prime periodical payment award: on it. The harsh fact is however that the difficulties in assessing the true cost of amount of damages that the unfortunate periodical payments. It is also a reminder Chrissie Johnson (A protected claimant will actually receive is dependent that press reports on the size of claims person....) v Serena Compton- on how long she lives. settlements may not necessarily be Cooke - High Court 2010 accurate. The figure of £17.5 million appears to The claimant suffered catastrophic brain be based on an estimate of longevity to injuries when the car she was a passenger age 65 which the defendant’s insurers’ in collided with a lorry. She was left with Zenith believe is far too optimistic given the life-long care needs and currently resides in severity of the claimant’s injuries. Zenith a specialist care home. The parties agreed a has reported that the claimant would in settlement of £4 million on a lump sum basis their view be fortunate to live to 60 and plus periodical payments of £300,000 per say that £11.5 million is the most that the annum for life linked to the Annual Survey of settlement is really worth. They also say that Hours and Earnings index 6115. the claimant’s solicitors themselves have conceded that 60 is a more realistic figure The claimant was only sixteen years old at for longevity. The claimant’s solicitors have the time of the accident and twenty at the subsequently suggested that the figure time the settlement was approved. quoted in newspapers has been calculated and exaggerated by the press. 6 Technical claims brief, monthly update – November 2010
  • 9. Step-parents once more able to claim fatal accident compensation in Scotland: Roslyn Evelyn Mykoliw and Others v Arthur James Botterill – Court of Session Outer House (2010) The first pursuer’s husband was killed in an accident at work. A total of twelve relatives brought claims in connection with the death including the deceased’s step father. The step-father sought a lump sum award for “non-partimonial loss” following a wrongful death. This is often referred to as a “loss of society” claim and is compensation for the emotional loss suffered by a bereaved relative. Section 35 of the Family Law (Scotland) Act 2006 sets out the wide range of family members who can claim for “loss of society” including anyone who accepted the deceased as a child of his or her family. The Act also however bars claims from anyone who was related to the deceased by reason of affinity i.e. a relative The Judge held that to accept the Comment: the court’s judgment has clarified through marriage including step parents. defender’s argument would be unjust. Had an apparently contradictory Act and has the pursuer been simply cohabiting with the prevented the need for further legislation. The defenders not surprisingly argued deceased’s mother rather than married to The bad news for defenders is that the that the step-father’s claim was excluded. her there would have been no impediment already extensive range of relatives who The pursuer argued that he was entitled to to his claim. To discriminate against him can claim for loss of society now includes claim having accepted the deceased into his purely on the grounds of his matrimonial step-parents. family and having formed a close and loving status was both irrational and in breach relationship with him. of Article 8 of the European Convention on Human Rights. It was not the Scottish Parliament’s intention to prevent step- parents who accepted a child into their family from claiming for loss of society if they subsequently died.
  • 10. Scottish loss of society Jury awards in Scotland have often been criticised by defenders as too inconsistent awards “Out of control”: and too large but there is House of Lords Philipa Young and Marie authority (Currie v Kilmarnock and Louden Paiser v M.O.D. - Court of District Council) for the idea that Judges should follow juries in these cases. Some Session (2010) Scottish solicitors now regard loss of society The mother and sister of a serviceman awards as out of control. killed in Afghanistan when the plane he was travelling in blew up have been awarded Comment: fatal accidents have long £90,000 and £60,000 respectively by an been one of the areas where damages Edinburgh jury. The jury may have been in Scotland far exceed those in England expressing their anger at the M.O.D.’s and Wales. In addition to the escalating alleged sacrifice of safety to save expense levels of loss of society awards there is a but these awards were made against a private members bill lodged by MSP Bill background of rapidly escalating damages Butler currently under consideration in the in this area. The awards for loss of society Scottish Parliament which if enacted would guidance and (emotional) support contrast automatically exclude surviving spouses’ sharply with bereavement awards in earnings from the calculation of dependency England and Wales which are capped by awards. This would greatly increase many statute at £11,800 and which must be split awards and see awards made where there between qualifying relatives. was in reality no financial loss. The writer’s thanks go to Simpson and Marwick Solicitors for their notes on the above two cases. 8 Technical claims brief, monthly update – November 2010
  • 11. Completed 25 October 2010 – Written QIEL and the QBE Group do not have by and copy Judgments and/or source any duty to you, whether in contract, tort, material available from John Tutton under statute or otherwise with respect to (contact no: 01245 272756, e-mail: or in connection with this publication or the john.tutton@uk.qbe.com). information contained within it. Disclaimer QIEL and the QBE Group have no obligation to update this report or any information This publication has been produced by contained within it. QBE Insurance (Europe) Ltd (“QIEL”). QIEL is a company member of the QBE To the fullest extent permitted by law, Insurance Group. QIEL and the QBE Group disclaim any responsibility or liability for any loss or Readership of this publication does not damage suffered or cost incurred by you create an insurer-client, or other business or by any other person arising out of or in or legal relationship. connection with you or any other person’s reliance on this publication or on the This publication provides information about information contained within it and for any the law to help you to understand and omissions or inaccuracies. manage risk within your organization. Legal information is not the same as legal advice. QBE Insurance (Europe) Limited and This publication does not purport to provide QBE Underwriting Limited are authorised a definitive statement of the law and is not and regulated by the Financial Services intended to replace, nor may it be relied Authority. QBE Management Services (UK) upon as a substitute for, specific legal or Limited and QBE Underwriting Services (UK) other professional advice. Limited are both Appointed Representatives of QBE Insurance (Europe) Limited and QBE QIEL has acted in good faith to provide an Underwriting Limited. accurate publication. However, QIEL and the QBE Group do not make any warranties or representations of any kind about the contents of this publication, the accuracy or timeliness of its contents, or the information or explanations given.
  • 12. QBE European Operations Plantation Place 30 Fenchurch Street London EC3M 3BD tel +44 (0)20 7105 4000 fax +44 (0)20 7105 4019 enquiries@uk.qbe.com www.QBEeurope.com 2476/TECHNICALCLAIMSBRIEF/NOVEMBER2010 QBE European Operations is a trading name of QBE Insurance (Europe) Limited and QBE Underwriting Limited. QBE Insurance (Europe) Limited and QBE Underwriting Limited are authorised and regulated by the Financial Services Authority. QBE Management Services (UK) Limited and QBE Underwriting Services (UK) Limited are both Appointed Representatives of QBE Insurance (Europe) Limited and QBE Underwriting Limited.